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Chapters
2: Issue and Redemption of Debentures
3: Financial Statements of a Company
▶ 4: Analysis of Financial Statements
5: Accounting Ratios
6: Cash Flow Statement
![NCERT solutions for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ chapter 4 - Analysis of Financial Statements - Shaalaa.com](/images/accountancy-company-accounts-and-analysis-of-financial-statements-english-class-12_6:a62c05fff53f436ba0c471c69aa1d89e.jpg "NCERT solutions for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ chapter 4 - Analysis of Financial Statements")
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Solutions for Chapter 4: Analysis of Financial Statements
Below listed, you can find solutions for Chapter 4 of CBSE NCERT for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२.
NCERT solutions for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ 4 Analysis of Financial Statements Intext Questions [Pages 175 - 187]
Test your Understanding – I Fill in the blanks with appropriate word(s):
Analysis simply means ______ data.
Interpretation means ______ data.
Comparative analysis is also known as ______ analysis.
Common size analysis is also known as ______ analysis.
The analysis of the actual movement of money inflow and outflow in an organisation is called ______ analysis.
Do it yourself
From the following particulars, prepare a comparative statement of profit and loss of Narang Colours Ltd. for the years ended March 31, 2016 and 2017:
| Particulars | Note No. | 2016-17 | 2015-16 |
| 1. Revenue from operations | 40,00,000 | 35,00,000 | |
| 2. Other income | 50,000 | 50,000 | |
| 3. Cost of material consumed | 15,00,000 | 18,00,000 | |
| 4. Changes in inventories of finished goods | 10,000 | (15,000) | |
| 5. Employee benefit expenses | 2,40,000 | 2,40,000 | |
| 6. Depreciation and amortisation | 25,000 | 22,500 | |
| 7. Other expenses | 2,66,000 | 3,02,000 | |
| 8. Profit | 20,09,000 | 14.27,300 |
Notes to Accounts
| Particulars | 2016-17 | 2015-16 |
| 1. Other expenses | ||
| i) Power and fuel | 36,000 | 40,000 |
| ii) Carriage outwards | 7,500 | 9,500 |
| iii) License fees | 2,500 | 2,500 |
| iv) Selling and distribution | 1,70,000 | 1,90,000 |
| v) Provision of tax | 50,000 | 60,000 |
| 2,66,000 | 3,02,000 |
From the Balance Sheets for the years ended March 31, 2016 and 2017, prepare the comparative Balance Sheet of Omega Chemicals Ltd.:
| Particulars | Note No. | Rs. in Lakhs | |
| 2017 (Rs.) | 2016 (Rs.) | ||
| I. Equity and Liabilities | |||
| 1) Shareholders’ Fund | |||
| a) Share capital | 5 | 10 | |
| b) Reserve and surplus | 3 | 2 | |
| 2) Non-current liabilities | |||
| Long-term borrowings | 5 | 8 | |
| 3) Current liabilities | |||
| Trade Payable | 2 | 4 | |
| Total | 15 | 24 | |
| II. Assets | |||
| 1) Non-current assets | |||
| a) Fixed assets | |||
| - Tangible assets | 14 | 8 | |
| - Intangible assets | 3 | 2 | |
| 2) Current assets | |||
| a) Inventories | 5 | 4 | |
| b) Cash and cash equivalents | 2 | 1 | |
| Total | 24 | 15 | |
Prepare a common-size balance sheet of Raj Co. Ltd. as at March 31, 2016 and March 31, 2017 from the given information:
| Particulars | 2017 | 2016 |
| I. Equity and Liabilities | ||
| 1. Shareholders fund | ||
| a) Share capital | 20,00,000 | 15,00,000 |
| b) Reserve and surplus | 3,00,000 | 4,00,000 |
| 2. Non-current liabilities | ||
| Long-term borrowings | 9,00,000 | 6,00,000 |
| 3. Current liabilities | ||
| Trade payables | 3,00,000 | 2,00,000 |
| Total | 35,00,000 | 27,00,000 |
| II. Assets | ||
| 1. Non-current assets | ||
| a) Fixed assets | ||
| - Tangible assets | 20,00,000 | 15,00,000 |
| - Intangible assets | 9,00,000 | 6,00,000 |
| b) Current assets | ||
| - Inventories | 3,00,000 | 4,00,000 |
| - Cash and cash equivalents | 3,00,000 | 2,00,000 |
| Total | 35,00,000 | 27,00,000 |
Test Your Understanding – II Choose the right answer:
The financial statements of a business enterprise include ______.
Balance sheet
Statement of Profit and Loss Account
Cash flow statement
All the above
The most commonly used tools for financial analysis are ______.
Horizontal analysis
Vertical analysis
Ratio analysis
All the above
An annual Report is issued by a company to its ______?
Directors
Auditors
Shareholders
Management
Balance Sheet provides information about financial position of the enterprise ______.
At a point in time
Over a period of time
For a period of time
None of the above
Comparative statement are also known as?
Dynamic analysis
Horizontal analysis
Vertical analysis
External analysis
Test Your Understanding – III
State whether the following is True or False:
The financial statements of a business enterprise include cash flow statement.
State whether the following is True or False:
Comparative statements are a form of horizontal analysis.
State whether the following is True or False:
Common size statements and financial ratios are the two tools employed in vertical analysis.
State whether the following is True or False:
Ratio analysis establishes a relationship between two financial statements.
State whether the following is True or False:
Ratio analysis is a tool for analysing the financial statements of any enterprise
State whether the following is True or False:
Financial analysis is used only by the creditors.
State whether the following is True or False:
The statement of profit and loss account shows the operating performance of an enterprise for a period of time.
State whether the following is True or False:
Financial analysis helps an analyst to arrive at a decision.
State whether the following is True or False:
Cash Flow Statement is a tool of financial statement analysis.
State whether the following is True or False:
In a Common size statement each item is expressed as a percentage of some common base.
NCERT solutions for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ 4 Analysis of Financial Statements Questions for Practice [Pages 188 - 192]
Short Answer Questions
List the techniques of Financial Statement Analysis.
Distinguish between Vertical and Horizontal Analysis of financial data.
State the meaning of Analysis and Interpretation.
State the importance of Financial Analysis?
What are comparative financial statements?
What do you mean by Common Size Statements?
Long Answer Questions
Describe the different techniques of financial analysis.
Explain the limitations of financial analysis.
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.
What do you understand by analysis and interpretation of financial statements? Discuss its importance.
Explain how common size statements are prepared giving an example.
Numerical Questions
The following are the balance sheets of Alpha Ltd., as at March 31, 2016 and 2017. You are required to prepare a comparative balance sheet.
| Particulars | March 31, 2016 (Rs.) | March 31, 2017 (Rs.) |
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds | ||
| (a) Share Capital | 2,00,000 | 4,00,000 |
| (b) Reserve & Surplus | 1,00,000 | 1,50,000 |
| 2. Non-current Liabilities | ||
| (a) Long Term Borrowings | 2,00,000 | 3,00,000 |
| 3. Current Liabilities | ||
| (a) Short-term borrowings | 50,000 | 70,000 |
| (b) Trade Payables | 30,000 | 60,000 |
| (c) Other Current Liabilities | 20,000 | 10,000 |
| (d) Short-term Provisions | 20,000 | 20,000 |
| Total | 6,20,000 | 10,20,000 |
| II. Assets | ||
| 1. Non-Current Assets | ||
| (a) Fixed Assets | 2,00,000 | 5,00,000 |
| (b) Non-Current Investments | 1,00,000 | 1,25,000 |
| 2. Current Assets | ||
| (a) Current Investments | 60,000 | 80,000 |
| (b) Inventories | 1,35,000 | 1,55,000 |
| (c) Trade Receivables | 60,000 | 90,000 |
| (d) Cash and Cash Equivalents | 25,000 | 10,000 |
| (e) Short-term Loans & Advances | 40,000 | 60,000 |
| Total | 6,20,000 | 10,20,000 |
The following are the balance sheets of Beta Ltd. at March 31, 2016 and 2017.
| Particulars | 2016 Rs. |
2017 Rs. |
| I. Equity and Liabilities |
|
|
|
1. Shareholders' Funds |
||
|
(a) Share capital |
4,00,000 | 3,00,000 |
|
(b) Reserves and surplus |
1,50,000 | 1,00,000 |
|
2. Non-Current Liabilities |
||
|
(a) Loan from IDBI |
3,00,000 | 1,00,000 |
|
3. Current Liabilities |
||
|
(a) Short-term borrowings |
70,000 | 50,000 |
|
(b) Trade payables |
60,000 | 30,000 |
|
(c) Other current liabilities |
1,10,000 | 1,00,000 |
|
(d) Short-term provisions |
10,000 | 20,000 |
| Total | 11,00,000 | 7,00,000 |
| II. Assets |
|
|
|
1. Non-Current Liabilities |
||
|
(a) Fixed assets |
4,00,000 | 2,20,000 |
|
(b) Non-current investments |
2,25,000 | 1,00,000 |
|
2. Current Assets |
||
|
(a) Current investments |
80,000 | 60,000 |
|
(b) Stock |
1,05,000 | 90,000 |
|
(c) Trade receivables |
90,000 | 60,000 |
|
(d) Cash and cash equivalents |
1,00,000 | 85,000 |
|
(e) Short term loans and advances |
1,00,000 | 85,000 |
| Total | 11,00,000 | 7,00,000 |
Prepare a Comparative Balance Sheet.
Prepare a Comparative Statement of Profit and Loss from the following information.
| Particulars | 2015-16 Rs. |
2016-17 Rs. |
| Freight Outward | 20,000 | 10,000 |
| Wages (office) | 10,000 | 5,000 |
| Manufacturing Expenses | 50,000 | 20,000 |
| Stock adjustment | (60,000) | 30,000 |
| Cash purchases | 80,000 | 60,000 |
| Credit purchases | 60,000 | 20,000 |
| Returns inward | 8,000 | 4,000 |
| Gross profit | (30,000) | 90,000 |
| Carriage outward | 20,000 | 10,000 |
| Machinery | 3,00,000 | 2,00,000 |
| Charge 10% depreciation on machinery | 10,000 | 5,000 |
| Interest on short-term loans | 20,000 | 20,000 |
| 10% debentures | 20,000 | 10,000 |
| Profit on sale of furniture | 20,000 | 10,000 |
| Loss on sale of office car | 90,000 | 60,000 |
| Tax rate | 40% | 50% |
Prepare a Comparative Statement of Profit and Loss from the following information:
| Particulars | 2015-16 Rs. |
2016-17 Rs. |
| Manufacturing expenses | 35,000 | 80,000 |
| Opening stock | 30,000 | 60% of closing stock |
| Sales | 9,60,000 | 4,50,000 |
| Returns outward | 4,000 (out of credit purchase) | 6,000 (out of cash purchase) |
| Closing stock | 150% of opening stock | 1,00,000 |
| Credit purchases | 1,50,000 | 150% of cash purchase |
| Cash purchases | 80% of credit purchases | 40,000 |
| Carriage outward | 10,000 | 30,000 |
| Building | 1,00,000 | 2,00,000 |
| Depreciation on building | 20% | 10% |
| Interest on bank overdraft | 5,000 | - |
| 10% debentures | 2,00,000 | 20,00,000 |
| Profit on sale of copyright | 10,000 | 20,000 |
| Loss on sale of personal car | 10,000 | 20,000 |
| Other operating expenses | 20,000 | 10,000 |
| Tax rate | 50% | 40% |
Prepare a Common size statement of profit and loss of Shefali Ltd. with the help of following information:
| Particulars | 2015-16 (Rs) |
2016-17 (Rs) |
| Revenue from operations | 6,00,000 | 8,00,000 |
| Indirect expense | 25% of gross profit | 25% of gross profit |
| Cost of revenue from operations | 4,28,000 | 7,28,000 |
| Other incomes | 10,000 | 12,000 |
| Income tax | 30% | 30% |
Prepare a Common Size balance sheet from the following balance sheet of Aditya Ltd. and Anjali Ltd.:
| Particulars | Aditya Ltd. Rs. |
Anjali Ltd. Rs. |
| I. Equity and Liabilities | ||
|
a) Equity share capital |
6,00,000 | 8,00,000 |
|
b) Reserves and surplus |
3,00,000 | 2,50,000 |
|
c) Current liabilities |
1,00,000 | 1,50,000 |
| Total | 10,00,000 | 12,00,000 |
| II. Assets | ||
|
a) Fixed assets |
4,00,000 | 7,00,000 |
|
b) Current assets |
6,00,000 | 5,00,000 |
| Total | 1,00,0000 | 12,00,000 |
Solutions for 4: Analysis of Financial Statements
NCERT solutions for अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ chapter 4 - Analysis of Financial Statements
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Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in अकाउंटेंसी कंपनी अकाउंट्स एण्ड एनालिसिस ऑफ फाइनेंशियल स्टेटमेंट्स [अंग्रेजी] कक्षा १२ chapter 4 Analysis of Financial Statements are Concept of Financial Statement Analysis, Comparative Income Statement, Comparative Financial Statement, Common-Size Statement, Tools of Analysis of Financial Statements, Comparative Financial Statement, Comparative Balance Sheet, Common Size Balance Sheet, Common-Size Income Statement.
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